Yesterday’s bearish US inventories update from the Energy Information Administration (EIA) continued weighing on crude prices today, pushing US light, sweet crude below US$81/barrel, while April Brent Crude slipped to US$78.60/barrel.
The EIA said that oil stockpiles increased by 4.1 million barrels, which was far ahead of expectations, while gasoline stocks added 700,000 barrels to signal lower demand. Distillate stockpiles that include heating oil dropped 900,000 barrels, though it was a lesser decline than projected.
The update was about in line with Tuesday’s data from the American Petroleum Institute (API), which reported a 2.7 million barrel increase in oil stocks, while gasoline inventories were up 900,000 barrels, however, distillate inventories fell by 4.1 million barrels, indicating stronger demand.
Crude got some support from reports of an attack on Italian oil and gas company Agip’s oil facility in Nigeria that connected several tank farms to its oil field.
Movement in the currency markets also factored in with the US dollar losing ground after the strengthening of the euro ahead of today’s debt issue by Greece, whose debt crisis has been weighing on Europe’s single currency for months, pushing it down to 10 month lows against the greenback at one point.
A stronger US dollar makes dollar-denominated commodities including oil more expensive for holders of other currencies.
Major oil and gas producers were mixed today. Cairn Energy (LSE: CNE) outperformed its peers, climbing 1.5%. BP (LSE: BP) posted a small gain, while fellow supermajor Shell (LSE: RDSB) was flat. Tullow Oil (LSE: TLW) declined marginally, while BG Group (LSE: BG) was down 1%.
Petrofac (LSE: PFC) also shed less than 1%, while fellow oil and gas engineering firm Amec (LSE: AMEC) tumbled 6.5% after releasing its full year results that revealed a 3% decline in sales.
Most midcaps posted gains with the exception of JKX Oil & Gas (LSE: JKX), which lost 1.3%.
Salamander Energy (LSE: SMDR) led the sector in the FTSE 250, gaining nearly 2%. Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL) followed, advancing 1.6% and 1.2% respectively, while Premier Oil (LSE: PMO) and Soco International (LSE: SIA) added less than 1%.
Dana Petroleum (LSE: DNX) and Melrose Resources (LSE: MRS) were flat.
Wood Group (LSE: WG) added 1%, while fellow services company Wellstream Holdings (LSE: WSM) posted an insignificant gain.
Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) and North American based explorer Nighthawk Energy (AIM: HAWK) led the juniors with gains of 9.5% and 6.5% respectively.